Johnson School MBA Student-Run Hedge Fund Beats Market
Some of tomorrow’s hedge fund superstars are currently toiling with investment management and hedge fund techniques during their MBA programs. The Johnson School at Cornell University has just released news of a recent program that has been remarkably successful, unlike many of their real-world counterparts. The student-run Cayuga MBA Fund escaped a bruising year in 2008, delivering a fourth quarter return of -1.29 percent and finishing the year up 0.42 percent.
The $14+ million Cayuga MBA Fund is an investment vehicle that aims to provide a competitive rate of risk-adjusted return to its investors while enhancing the educational and professional opportunities of the Johnson School’s MBA students. It is supported by the analytical platform of the Parker Center, cutting-edge research by faculty members, and extensive participation by student portfolio managers.
Parker Center is a classroom providing real-time stock quotes, international data feeds, and financial analysis software and data valued at more than $1.8 million per year in licensing fees and comparable, if not better, than the resources found at many Wall Street firms.
How is the Cayuga MBA Fund different from other university-based funds? The School says it’s a combination of these four factors:
- the unusual degree of decision-making responsibility entrusted to the student fund managers, under appropriate oversight by faculty and investment professionals
- the exceptional performance the fund has achieved
- the access to electronic datafeeds and analytical software valued at more than $1.8 million in annual licensing fees
- the structured performance-learning environment in which students take a class and apply theoretical frameworks to managing equities for real investors with continual expert feedback from faculty and professionals in the field.
Andy Herr (MBA ’09), investment relations representative for the fund, says “In spite of governmental efforts to prop up the financial industry and by extension, the equity markets, the economic picture remains very challenging and we expect this trend to continue throughout 2009. The Cayuga Fund intends to remain focused on generating absolute return through a combination of selective stock-picking and prudent risk management.”